Is Yum! Brands Inc (YUM) overvalued?
On Equity Rank's model estimate, YUM trades close to its fair value (6% above it). Yum! Brands Inc (YUM) last closed at $161.14; the multi-method model fair value is $151.50.
| Price | Model fair value | Price vs model |
|---|---|---|
| $161.14 | $151.50 | 6% above |
What the answer rests on
- 2 of 7 valuation methods put YUM's value above its price and 5 put it below, so the methods disagree.
- To justify today's price, YUM's free cash flow would need to grow about 5.6% a year for ten years (a reverse discounted cash flow). Over the last three years it actually grew 12.6% a year.
- YUM trades at 13.4 times its last year's earnings, against a median of 28.0 for 28 profitable Restaurants companies.
- Over the past year the price sat below the model fair value on 0% of trading days. The gap ranged from 3% above to 39% above the model fair value.
Read this before relying on it
The model fair value is an estimate from published financial statements. It is not a forecast of where the price goes, and it can be wrong. Within 10% either side we call it close to fair value: valuation models are not precise enough to read more into a smaller gap. Our own lists have no proven edge over the market yet; the live record shows every result, misses included.
Every valuation method behind YUM's fair value · What prices assume · Other companies